Finance & Banking

Last updated: Wednesday, December 19, 2018

Miracles on Vietnam Stock Market

Posted: Thursday, February 01, 2018

The Vietnamese stock market witnessed a spectacular leap in 2017. VN-Index advanced nearly 50 per cent to 984 points in the year and HNX-Index jumped 31.4 per cent to 116.86. According to statistics, the Vietnamese stock market was the third best performer in the world just after Argentina that expanded 59.25 per cent and Mongolia which surged 110.1 per cent.

Achievements in 2017

HNX- Index, HNX30 and UPCoM: spectacular growth

By the end of December 2017, the Hanoi Stock Exchange (HNX) had 384 listed companies with a total listed share value of VND118,250 billion and a market capitalisation of VND222,894 billion. Average daily trading volume was 55.6 million shares worth VND644.2 billion in the year, up 20.25 per cent in volume and 24.72 per cent in value over 2016.

HNX30-Index impressively added 78.06 points or 35.2 per cent to end at 221.6 points in 2017. The market capitalisation of HNX30 stocks accounted for 60.23 per cent of the HNX market capitalisation. Over 7,015 million shares were traded for over VND101,659 billion, accounting for 50.52 per cent of volume and 61.85 per cent of value on HNX. On average, 28.06 million shares worth VND406.6 billion changed hands a day.

The UPCoM market had 690 companies registering for trading. Their registered share value was VND241,580 billion and had a market capitalisation at VND677,705 billion, three times that of 2016 and over three times listed share market value. UPCoM-Index inched up 1.09 points, or 2.03 per cent, to 54.91 points in 2017.

VN- Index tops 10-year high

VN-Index closed at 984 points, nearly 50 per cent higher than a year earlier, on the last trading session of 2017, setting the highest close in 10 years. In addition to index performance, market liquidity recorded significant growth. Previously, it was rare to see a daily trading value of VND5 trillion but it was common in 2017 when some trading sessions ended with VND6 trillion or even VND7 trillion worth of shares having changed hands. This strengthened the investor trust in the market.

Driven by big stocks, the market capitalisation amounted to US$150 billion at the end of 2017, or 68 per cent of the country’s GDP. Thus, the goal of bringing the stock market capitalisation value to 70 per cent of GDP by 2020 set by the Government of Vietnam is completely within reach.

In 2018, the Vietnamese stock market will have more major IPOs and listings of industry leaders like PVOil, FPT Retail, Thaco and Vicem. This will result in a bigger size of the stock market.

Surpassing all-time high in 2007: Foreign inflow is US$1.2 billion

Most economic experts pointed out that, with VN-Index rising nearly 50 per cent, the stock market was impressively beyond expectations in 2017. This outcome was significantly contributed by foreign investors. According to statistics from the State Securities Commission of Vietnam (SSC), in 2017, foreign investors bought net VND26 trillion while they sold net VND6,821 billion in 2016.

On HNX, foreign investors bought 691.83 million shares for VND13,163 billion, up 6.2 per cent in volume and up 25.2 per cent value over 2016.

In the UPCoM market, foreign investors traded 166.85 million shares valued at VND6,482 billion in the year, 61.7 per cent in volume and 73.1 per cent in value over 2016. Of the sum, they bought 146.77 million shares and sold 58.7 million shares.

Strong foreign buying on all three bourses in 2017 pushed the daily value to all-time records, higher than the peak in 2017. Top picks by foreigners included VRE, VNM, DIG and VJC.

Many supports for the market in 2018Impressive results in 2017 created great motivation and confidence for investors as well as securities experts. Mr Nguyen Hieu, General Director of Viet Dragon Securities Corporation, said that although the general level of stocks has been raised quite high, the selectivity is very strong. Thus, the stock market development in 2017 will be more sustainable than 10 years ago and, given the growth in 2017, the stock market will be positive at least in the six months of 2018.

Under the guidance of Finance Minister Dinh Tien Dung, the State Securities Commission of Vietnam (SSC) and related units must focus on five key tasks in 2018 as follows:1- Further improving institutions, mechanisms and policies with a focus placed on perfecting the amended Securities Law in a bid to provide favourable conditions for the stock market to develop;2- Further restructuring the stock market by merging two stock exchanges;3- Developing new products and new markets to further perfect the structure of the Vietnamese stock market, with a focus to introduce covered warrants on HOSE in the first quarter 2018, launch G-bond futures on HOSE in the first quarter and on HNX in the third quarter; studying fundraising mechanism for start-up enterprises through stock exchanges;4- Effectively organising bond tenders and bond transactions, studying the issuance of "green bonds";5- Further accelerating SOE equitisation and State divestment in enterprises.

Mr Nguyen The Minh, chief analyst at Saigon Securities Incorporated (SSI), said that, in 2018, VN-Index will continue to reach new highs and may even climb to the peak of 1,340 points. Sharing this prospect with Mr Minh, Mr Phan Dung Khanh, Investment Advisory Director of Maybank Kim Eng Securities Company (MBK), predicted that VN-Index is likely to reach 1,200-1,300, primarily driven by stocks the VN30 basket.

Expert opinions are well-grounded when we witnessed the performance in early 2018. By the end of January, VN-Index exceeded the 1,100-point threshold in the ultimate excitement of investors. Without doubt, VN-Index’s growth beyond the 1,000-point threshold was considered a turning point in investor sentiment because it was expected for more than 10 years. Investors are hoping that VN-Index will break through the all-time high of 1,179.32 points reached on March 12, 2007.

A representative from Vietcombank Securities Company (VCBS) said macroeconomic stability will be a positive support for the market growth. In addition, the Government advocated easing exchange rates, inflation and interest rates to support growth in 2018. This will ensure macroeconomic stability and it will give a helping hand to the overall market trend.

Coupled with State divestments in big State-owned enterprises (SOEs) like Petrolimex, Vinatex, VnSteel and Viglacera, mergers and acquisitions (M&As) deals may be even stronger in 2018. By the end of 2017, many enterprises had not completed their privatisation plans, forcing many to go public in 2018, including Genco 1, Genco 2, VTC, Handico, SGCC, SATRA, Ben Thanh Corporation, SJC, Resco, Sawaco and Samco. And, some big banks are catching the interest of investors such as Techcombank, HD Bank and OCB. For that reason, VN-Index will continue to stage strong growth in in 2018 when cash flows remain vibrant in the market.